How Bruce Gordon, the man from WIN, helped catch Silvio Berlusconi

It was the scam that brought down a Prime Minister. But what is less known is the role of a powerful yet low-key Australian media mogul.

Bruce Gordon and Silvio Berlusconi.
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by
James Chessell and Paola Totaro

On a mild early summer afternoon in 2006, Bruce Gordon, the billionaire owner of regional television network WIN Corporation, walked through the stark glass doors of Monaco's police headquarters. It was just before 3pm on June 7.

Assisted by an interpreter – and in the presence of one of Italy's most ferocious public prosecutors, Fabio De Pasquale – Gordon spent the next three hours answering questions about his relationship with another media mogul, the former Italian prime minister Silvio Berlusconi.

When Gordon was called to Monaco's Division de Police Judiciare, he knew he had little choice but to co-operate. The building, a 1960s brutalist patchwork of concrete and terrazzo tiles is not just the home of the micro-state's domestic police but also houses the Operational Liaison Unit, specialists who handle requests from foreign investigative authorities such as the FBI or Italy's Criminalpol.

Monaco "is a sort of police state", observes a Milanese legal source familiar with Gordon's interviews. The principality might be safe, discreet and gloriously income tax free for the very rich who live there "but as soon as they are called by the police to be interviewed they have to go there to tell the truth", the lawyer adds. "Or risk their residency."

WIN TV owner Bruce Gordon in 2007.
Rob Homer

Since 1985, Gordon's primary residence has been Bermuda, where he lives with his second wife Judith on the 10-hectare Wreck Hill estate, once owned by Bee Gees manager Robert Stigwood. He regularly visits his hometown of Sydney. But he also keeps an apartment in Monaco close to the French border, about a kilometre up the road from the police station.

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This was Gordon's second visit with the Monaco police. The first interview had taken place more than two years before, on March 31, 2005. According to a transcript obtained by AFR Weekend, this interview had lasted two hours and meandered over more than a decade of Gordon's successful career at the Hollywood studio, Paramount, selling TV program and movie broadcast rights to television networks around the world.

This time Gordon's interlocutor cut immediately to the chase. "During your previous deposition, you produced a photograph of you with Mr Silvio Berlusconi," De Pasquale asked. "Where was this photo taken and when?"

Opulent family estate

Gordon told him the snapshot was taken in 1990 at Arcore, Berlusconi's opulent family estate in Milan, during a private visit from Martin Davis, the crusty New Yorker credited with turning an unwieldy conglomerate called Gulf and Western into the modern Paramount.

Fabio De Pasquale, the Italian prosecutor who interviewed Bruce Gordon in 2006 and whose investigation led to the conviction of Silvio Berlusconi on tax fraud charges.
GIUSEPPE ARESU

"I don't remember if [Berlusconi] had already entered politics but certainly he had bodyguards although I think it is because his children had been threatened with kidnapping," said Gordon. "I met him at his home in Milan, in Rome in the house near the church, the one which is accessed by a spiral staircase."

Gordon explained he had also met the Milanese multi-billionaire in Los Angeles, where the conversation even wandered beyond the usual business of selling Italian broadcast rights to programs such as Star Trek and Mission Impossible.

Gordon told Berlusconi there was a Paramount film under production about the infamous Vatican banking scandal involving the Masonic lodge P2, which led to the collapse of Banco Ambrosiano in 1982 and the death of its chairman, Roberto Calvi, who was found hanging from London's Blackfriars Bridge.

Berlusconi would enjoy the Vatican's tacit support for much of his political career. Not surprisingly, he did not embrace the new creative venture. "Mr Berlusconi was very much opposed to it," Gordon said.

"And Frank Agrama?" asked the prosecutor, "what role did he play in the buying and the selling of the [TV] rights contracts? Agrama said he knew Mr Berlusconi well. Can you tell us everything you know about their relationship?"

For De Pasquale, information about Agrama – a gregarious, Egyptian-born B-movie producer turned TV distributor – was of the utmost importance. Gordon's answers would turn out to be a critical piece in the investigative jigsaw that sparked one of the longest and most sensational trials in Italian history and culminated in late 2013 in Berlusconi's expulsion from Parliament.

Indeed, by the time the Australian was brought into Monaco's police station for a second time, De Pasquale had already spent five years chasing a paper trail of cooked books, secret Swiss bank accounts and dubious offshore companies linked to Berlusconi's television business, Mediaset.

And another six years would pass before Italy's highest court, Corte di Cassazione, would find Berlusconi, Agrama and two other Italian associates guilty of a complex fiscal fraud in which offshore companies were set up to buy the broadcasting rights for the mogul's private TV networks.

A photocopy of a page from 'Bruce Gordon and Friends', the pamphlet that marked the end of Gordon's 35 years at Paramount.
Jeff Allan

The case revealed that Fininvest, the vast Berlusconi family holding company that now owns a third of Mediaset, bought TV rights from Hollywood studios via the offshore subsidiaries and then sold them on to Mediaset at vastly inflated prices.

The scheme allowed the extra funds – estimated at €270 million ($386 million) – to be put into offshore slush funds controlled by Berlusconi and his associates, thus making Fininvest appear less profitable, and slashing its tax burden.

In some cases, Agrama acted as a middleman, buying low from studios such as Paramount or 21st Century Fox and selling high to Mediaset. But whether or not Agrama was involved, the result was the same.

Appealed against at every turn, Berlusconi's conviction was upheld in all three tiers of the Italian judicial system and ended in a four-year prison sentence for Italy's longest-serving post-war prime minister. One year later, the Italian parliament voted to expel and ban him from public office, ending his 19-year political tenure.

Then Italian TV manager Silvio Berlusconi with his son Pier Silvio in Milan, 1986.

What is less known, until now, is the key role the reclusive Gordon – who remains one of the most powerful figures in Australian television – played in a period of political and legal turbulence that was dramatic even by Italian standards.

Explosive allegations

Gordon's name not only appears 31 times in the Cassazione Court's 208-page final judgment but an investigation by AFR Weekend can reveal he was also the subject of a series of allegations made by three witnesses while Berlusconi, in a desperate, 11th-hour attempt to halt his expulsion from Parliament, also turned on his old acquaintance, publicly accusing Gordon and Agrama of being the "fox" and "cat" who secretly masterminded the multimillion-dollar tax fraud behind his back.

"It is important first of all to say that Mr Bruce Gordon was not part of the penal process. He was a witness for the prosecution and an important one," the legal source told AFR Weekend. "However, he is a very mysterious figure and he remains a mysterious figure."

When Gordon was interviewed in Monaco the first time in 2005, the Milanese prosecutors had already ascertained he was the Paramount boss ultimately responsible for the sale of film and TV content overseas during the period under investigation and that he had continued in the role until his retirement in 1997.

During questioning, Gordon offered up a short history lesson on the deregulation that transformed the previously sleepy, state-owned-and-operated Italian television industry in the 1970s and 80s. The emergence of a new crop of private broadcasters, he explained, revolutionised the way Hollywood studios did business in Italy by creating a new group of customers for American movies and TV programs.

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The biggest beneficiary of this change was Berlusconi, a former cruise ship crooner whose career began in construction. He founded his own network, Channel 5, and filled it with foreign soap operas and game shows to steal viewers away from the more earnest offerings broadcast by Italy's state-owned broadcaster, RAI. Over the years he bought up the domestic competition and took his mass market approach to France, Germany and Spain. For Berlusconi, the opening up of Europe's television markets made his fortune.

Silvio Berlusconi claimed he was the innocent victim of an amiable cat and a wily fox, as in the Italian morality story of Pinocchio.
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Hungry for fresh content for their fledgling stations, the private Italian broadcasters ended up generating huge extra profits for Hollywood, cementing the importance of senior executives like Gordon overseeing European sales.

"Do you know the company Fininvest?" Gordon was asked.

"Yes, it's a Berlusconi company …" he replied. " … There was a buyer, named Frank Agrama who was an agent for Berlusconi, he lived in Los Angeles and was always searching for new films."

For the prosecutors this was important stuff. They were convinced Agrama was Berlusconi's socio occulto (silent partner). It was a claim the ex-prime minister's legal team fought ferociously, insisting Agrama had acted without Berlusconi's approval or knowledge.

This meant Gordon's description of Agrama as an "agent" of the Italian billionaire – even if he would amend this wording in his second interview – turned out to be a decisive moment in the investigation.

Asked to tell the prosecutors everything he knew about the middleman and the mogul, Gordon said Agrama described Berlusconi as one of his closest friends, someone he spoke to often and had no trouble raising on the telephone. According to Gordon, Agrama had even congratulated Berlusconi by phone when he was elected PM in 1994.

"I'd like to state that for me, Mr Agrama was a representative of Mr Berlusconi but I do not know exactly the legal relationship between them," Gordon said as the interview drew to a close. "I have told you the truth, the whole truth and I have nothing more to declare."

Mystery not answered

Bruce Gordon and his wife Judith at Ten's annual meeting in Sydney in December 2014.
Photo: Michele Mossop

De Pasquale, however, wanted more. The mystery of why Agrama was involved in the buying and selling of some American TV programs and movies – when other content was sold directly to Berlusconi's companies – had not been answered.

The prosecutor pressed for more details about Gordon's role. "Did you ever receive funds from Frank Agrama?" he asked.

"No. To my knowledge, this is the case for all my staff. From the point of view of American law, I think this would be a criminal offence," was the firm reply.

"Were you the subject of an internal investigation within Paramount," De Pasquale persevered.

"I retired from Paramount in 1997 and had long passed the retirement age. There has not been any investigation into me."

Somehow this extraordinary chapter in Gordon's career has escaped public attention in Australia. Aside from two reports in 2009 that simply noted the BRW Rich Lister would give evidence during the trial, there has been no coverage. The fact that a prominent Australian businessman was involved in a colossal legal battle that brought down Italy's most contentious post-war leader had gone virtually unnoticed.

Gordon's role in these events emerged after years of investigations by the Italian authorities into Berlusconi's business affairs but there was never any suggestion from them that Gordon himself was involved. He was never charged and was a witness only. And although allegations were made against him by some of the players and – publicly – by Berlusconi himself, the allegations were never sustained.

Gordon parlayed an early career in the theatre in Sydney into a job at the top of Paramount while building a media empire back home in Australia. He owns Australia's largest regional network – WIN – with annual operating earnings of more than $50 million and little debt. And he is the largest shareholder in the embattled metropolitan broadcaster Ten Network Holdings.

Monaco, a "sort of police state", where Bruce Gordon was interviewed in 2005 and 2006.
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Yet in the notoriously bitchy Australian free-to-air television industry, his rivals are fond of portraying the 86-year-old as an unsophisticated throwback to a time when the likes of Hogan's Heroes guaranteed you ratings success. "The Beverly Hillbillies but in Wollongong," is how one Seven executive likes to describe WIN.

But sifting through the mountain of documents produced by the Mediaset case and interviewing those who worked with Gordon in Italy, Australia and the United States, it becomes clear there is nothing simple about him.

Paolo Biondani is co-author of the book, Il Cavaliere Nero or The Black Knight (Chiarelettere, 2013), a detailed account of the paper chase for Berlusconi's "hidden treasure" and his subsequent political demise. He tells AFR Weekend in Milan that in the Mediaset case, Gordon was "a very interesting character".

"First of all, he was only ever a witness," he says. "But the sentencing [reports, as judgements are sometimes known in Italy] explain that he helped the prosecution; he told our judges he dealt directly with Berlusconi and his managers; ergo he confirmed indirectly that the Agrama companies did nothing and he wasn't a real intermediary and he helped prove the Berlusconi-Agrama contracts were false and were simply used to extract funds from the Italian companies and put them into the Swiss accounts owned by Agrama and Berlusconi so tax could be avoided."

Biondani stresses Gordon was never accused of any crime in Italy. But he points out that the Australian — along with other Paramount executives — was a key part of the curious mechanism whereby certain Paramount rights were sold to Agrama who then onsold them to Berlusconi's Mediaset for inflated amounts.

"Only Gordon knows why Paramount accepted all this for so many years," he says.

Biondani, a senior investigative/legal reporter with the newspaper L'Espresso, argues the trial raised three possible theories about Bruce Gordon's role at Paramount.

The first, he suggests, is that Gordon "wasn't very intelligent" and didn't realise that Agrama was pocketing hundreds of millions of dollars by representing himself, falsely, as an exclusive agent for Paramount ...

Bermuda, Bruce Gordon's home since 1985.
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"The second is that Gordon knew that Berlusconi and Agrama were sharing the Paramount film money but said nothing because he too was being paid secretly: some witnesses claimed this in the trial and in the end, it became Berlusconi's own, final defence when he tried to present himself as a victim of Agrama and Gordon's trickery.

"The third is that all the big managers at Paramount, including Gordon knew about the price inflation but the studio's ultimate interest was in selling as many films in Italy as possible and so, accepted the Agrama/Berlusconi scheme because in the end, their fiscal fraud only damaged [Italy's tax take] Italy alone."

Left on good terms

Gordon argues he was just one of many executives at Paramount and other Hollywood studios who provided testimony during the 11-year investigation.

In a statement provided to AFR Weekend, he said the contracts Paramount signed with Berlusconi's companies were "generally similar" to the contracts between Paramount and other European rights buyers.

He said all the big European buyers used Los Angeles-based agents such as Agrama to secure content. Gordon says he left Paramount on good terms and strongly denies playing any part in a scheme by Berlusconi and Agrama to evade tax.

For his part, Gordon maintains the catchups with Berlusconi were a normal part of doing business. "He was a client — nothing more," the WIN owner said in Monaco.

AFR Weekend is not suggesting Gordon did play a part in the tax fraud. But the saga offers a rare glimpse into a remarkable era in international television sales, and into the murky world of Silvio Berlusconi, whose exploits continue to fascinate.

And one burning question remains. Here was Gordon, a self-made Australian billionaire clever enough to not just build his own media empire but also help reshape the way Hollywood studios did business in Europe. So how did he get tangled up in one of the more controversial trials Italy has seen?

One possible answer is that he was not subject to the same scrutiny as other studio executives. Gordon told the Italian prosecutors "he had a superior and that all my decisions were checked" and that "Paramount to my knowledge has never had any problems with the Berlusconi Group". Other Paramount executives – who reported to Gordon – signed the contracts with Berlusconi companies.

Yet Gordon was also granted a degree of autonomy. When he announced his resignation from Paramount in June 1997, the Hollywood press declared he was the last of a dying breed: "The retirement of Gordon, the last of a clutch of old-style TV 'toppers', signals the end of an era in which TV bosses … ran their operations their own way, with little interference from their studio bosses," reported industry bible Variety.

Under Gordon the division's revenues grew from $US8 million ($10.25 million) a year to several hundred million.

Gordon certainly wasn't afraid to voice his opinions when it came to his "client", Berlusconi. A few days before Christmas in 1993, he wrote to his boss Kerry McKluggage, chairman of Paramount Television, saying the repayment of tens of millions of dollars owed by Berlusconi's media companies would need to be "rescheduled".

"I think Berlusconi has been an extraordinarily valuable customer who has bought for Italy, France, Spain and sometimes Portugal and the nations of the Iron Curtain and has probably spent approximately $200 million in the last 10 years," Gordon wrote.

Gordon's request appears to have been granted because three months later he ticked off Joe Lucas, a less senior Paramount executive, in writing for not properly "defining" the new schedule.

To mark the end of his 35-year stint at Paramount, Gordon had a celebratory pamphlet printed. Titled "Bruce Gordon and Friends", he peppered it with photographs of him rubbing shoulders with his network of international media heavyweights. There are smiling snaps of Gordon with a young James Packer and his mother Ros; with Klaus Hallig, a longtime North American representative for the now defunct German media company Kirch Group who once said "Bruce is without question the dean of international TV"; with Prince Albert of Monaco. (Gordon was awarded an Honorary Golden Nymph Award at the 1998 Monte Carlo Television Festival recognising his "lifetime achievements".)

Pre-emptive strike

Gordon brought the pamphlet with him to his first interview with the Monaco police in 2005. It was something of a pre-emptive strike given he had been informed the local inspectors would accompany him back to his apartment afterwards so it could be searched. The pamphlet contained the photo of him with his arm around Berlusconi's shoulder at the Arcore estate.

It was an image that would come back to haunt Berlusconi.

With the benefit of hindsight, it is tempting to ascribe a sense of irresistible momentum to Gordon's career but the truth is his rise to the top of Paramount, the studio behind the likes of Happy Days and Cheers, was anything but inevitable.

Gordon was born in 1929 and grew up in the inner-Sydney suburb of Surry Hills. Holidays were spent on the NSW coast at Stanwell Park and, later, Corrimal, north of Wollongong. Gordon was an only child who kept to himself learning magic tricks. He would help at his father Albert's fruit stall outside the Lyceum Theatre in Pitt Street, sometimes juggling to lure customers. It was a humble and happy upbringing.

Gordon has always worked hard. He once said of his time at Paramount that he "lived in a suitcase", adding this way of life made it difficult to make close friends. This work ethic was evident as he continued to hone his magic act into his 20s, getting his first big break in 1952 with a gig at the home of variety, Sydney's Tivoli Circuit theatre.

Gordon used his onstage role to get involved in management at the Tivoli. Working as an advance man for the stage shows – and later as house manager – he handled everything from advertising to promotions to wrangling talent.

When Gordon promoted shows in Adelaide he would catch up with Rupert Murdoch, who was turning the Adelaide News into the beginnings of his global media empire during the 1950s. He became friendly with Bruce Gyngell – the Nine executive who had been poached by Sir Frank Packer to set up Australia's first commercial television station TCN-9 – as well as Sir Frank's sons, Kerry and Clyde.

"He worked hard. He was a good hustler. People liked him," says one media executive familiar with Gordon at that time.

Gordon may never have ended up in television had the popularity of television not killed off the Tivoli. He could see the writing on the wall and in 1962 was appointed Australasian sales executive for Desilu Productions, the Hollywood studio behind shows such as I Love Lucy and Star Trek.

It was a bold career move for someone short on TV experience but he got the gig after Gyngell convinced Sir Frank to provide Desilu with a recommendation. Five years later, Desilu was sold to Gulf and Western, which renamed the studio Paramount Television after its movie business.

Gordon impressed the new owners by doing what all good salesmen do, which is to spend many months of the year on the road chatting up customers. He once summarised his approach in an interview with VideoAge: "A guy at a [TV] station in Japan doesn't send you a postcard and say, 'I'll buy MacGyver'. You've got to get on a plane and go to Japan and see your clients and then make your deal."

He was promoted to president of international TV sales at Paramount in 1974, a position he held until his retirement 23 years later. Gordon ran Paramount's international sales division from New York, home until 1985 when he moved to Bermuda.

While Gordon climbed the corporate ladder at Paramount, he was assiduously assembling a media business of his own at home.

Long association

In the mid-1960s, he began his long association with Ten by buying stock as a family investment. He built up such a large stake that when Murdoch decided he wanted to take control of the network in 1979, he took Gordon out to lunch in New York and offered him his Wollongong TV station in exchange for the Ten shareholding. Gordon had knocked back a chance to run Murdoch's Adelaide Television more than 20 years earlier. He did not say no a second time round.

WIN, which has since expanded into every state, has always been the heart of Gordon's empire. But his business interests have included radio stations, property, the rugby league football club St George Dragons and the Crawfords production house behind The Flying Doctors and The Sullivans. More recently, he bought back into Ten, accumulating a 14.9 per cent stake.

Yet, for all his success, Gordon would be lucky to be recognised if he walked down the street in Wollongong, where he still owns an apartment and where the Bruce Gordon theatre can be found inside the Illawarra performing arts centre.

He gives the occasional interview and is not shy about defending his business interests, such as when he told The Australian Financial Review in November that his current Ten shareholding was not for sale "at any price".

But without the need to court the investment community – WIN is a private company that does not report financial results – he has mostly kept a low profile and has never relied on a public relations department because, as he once said, "we have not had any reason to do it".

All this makes Gordon an atypical figure in the Australian media landscape. Standing over 1.8 metres tall, silver haired and invariably dressed in a navy blazer and dress pants, there is a bit of the old-fashioned gentleman about him.

He is not a big believer in titles, being "deputy chairman" at WIN. He is capable of having entire conversations without swearing. He can be charming with a ready supply of anecdotes. Gordon is not matey with other media moguls in the way James Packer is close to Lachlan Murdoch or Kerry Stokes although he generally remains on good terms with all of them. He is often described as a "lone wolf".

Yet he can be as hard as nails. "Tough to the point of being difficult", according to someone who has done business with him. WIN has always been a cost conscious-organisation and Gordon is loath to throw money around unnecessarily.

Another side to Gordon was presented to the Federal Court in March 2013 when a former WIN executive, Rodney Hockey, sued the regional broadcaster over the size of his termination payment. In an explosive affidavit, Hockey portrayed WIN's corporate culture as poisonous and accused its octogenarian owner of bullying senior staff.

Hockey claimed Gordon once called him a "a f---ing prick" in the midst of a 20 minute tirade, adding, "if I was 20 years younger I would walk down there and knock you out". The affidavit included an email from WIN news director Chris Rickey who claims Gordon yelled in his face, calling him a "f---ing idiot" and described Hockey as a "lump of wood". WIN executives denied many of Hockey's claims at the time, saying they were made by a "disaffected former employee".

"Look there is no doubt Gordon can be charming," says one senior commercial television executive. "But he is also a tough old bastard."

On October 2012, 11 years after the first subpoenas were issued as part of the Mediaset investigation, three judges of the lower Italian court, the Tribunale Ordinario in Milan, found Berlusconi guilty of tax fraud, along with the middleman Frank Agrama, Mediaset manager Daniele Lorenzano and Gabriella Galetto, a long time Fininvest executive in charge of Fininvest's Swiss accounts.

Their 90-page judgment makes for interesting reading. In it, the judges set out exactly how the value of hundreds of packages of broadcasting rights were artificially inflated through a network of offshore companies controlled by Berlusconi's holding company, Fininvest, before the programs found their way on to Italian television screens.

The most intriguing description was provided by 20th Century Fox International executive, Douglas Schwalbe, in an email dated December 12, 1994, which was quoted in the sentencing document. Updating a colleague on $US1 million owed from one of Berlusconi's companies, he explains that the "Berlusconi empire works as an elaborate shell game to avoid Italian taxes".

Schwalbe uses the Robin Williams comedy, Mrs Doubtfire, to outline how prices were inflated. He explains how a company controlled by Berlusconi's Fininvest and based in the Swiss town of Lugano might buy the right to broadcast Mrs Doubtfire for $US2 million and then license the movie to Berlusconi's Channel 5 (part of Mediaset) for $US3 million. The difference – or profit – would be kept in Lugano. This would allow Berlusconi's company's to pay less tax.

Part of the profit would also likely find its way into a slush fund, although Schwalbe would not have been aware of this aspect of the scheme.

The judges would later wryly note Schwalbe seemed to know everything about the scheme "but he couldn't tell us which shell contained nothing".

While some observers claimed Gordon must have known how the broadcast rights were manipulated once purchased by Berlusconi's companies, he says Paramount was only involved at the point of sale.

His lack of suspicion is perhaps understandable because big European television buyers such as Berlusconi or Leo Kirch in Germany were made to purchase packages of programs that represented a large chunk of a studio's output, rather than individual movies or TV series.

This was a risky deal for the Italian or German broadcaster. Often a comedy that worked in English, for example, did not translate well to foreign screens. It meant the European broadcasters would sometimes on-sell part of their Paramount or MGM package to their own subsidiaries or a rival broadcaster at higher prices to recoup the cost of paying for a package of shows that would inevitably contain some duds.

So the fact Berlusconi was inflating the price of certain programs may not have raised a red flag at Paramount.

In some cases, however, Agrama inserted himself into the process. Rather than deal with a Berlusconi company directly, studios such as Paramount dealt with him.

B-movie director

"The peculiar thing is that ... Frank Agrama was a middle man with no status and no money," another senior Milanese legal source told AFR Weekend. "He's really the son of nobody. And all Paramount production for many years – at least 15 years – was channelled through Agrama." (Gordon says not all Paramount production was channelled through Agrama.)

The baffling Farouk "Frank" Agrama was born in Alexandria in 1935. He moved to Europe as a young man and distributed movies on the continent during the 1960s before migrating to the US, where he worked briefly as a B-movie director on films such as Dawn of the Mummy (about a group of US models who awaken an ancient mummy on a fashion shoot in Egypt).

In 1983, Agrama founded a production house in LA, Harmony Gold, and for a time enjoyed success producing the Japanese animation series Robotech.

Years later, it became clear to the investigators that not everyone was convinced that Agrama, the self-described entrepreneur, added any value at all to the TV rights negotiations. Why was an intermediary needed when Mediaset was perfectly capable of buying content on its own?

Certainly, on the two occasions that he felt he was being pushed out of his lucrative middleman's role, Agrama came out fighting, citing his long association with the Berlusconi family as protection. In one angry letter defending his role to Fininvest management obtained by AFR Weekend, he reminded them he'd worked for the group from 1976.

A Mediaset director and TV rights expert, Roberto Pace, also told prosecutors that in 1998, when he had tried to cut the middleman out of the process, Agrama refused to budge, insinuating the Berlusconi family would not be pleased.

"Agrama's pressure became intense. I remember a very bitter conversation where he told me that perhaps I hadn't understood who he was and the kind of relationship he had with 'the family'," recalled Pace. "He was arrogant, sure of the fact and wanted guarantees for the future, that is, payments of at least $40 million a year."

Pace took his concerns further up the chain, to Lorenzano, who was in charge of the American market, and even to Berlusconi's son, Pier Silvio, all to no avail. In the end, Pace decided that if he couldn't beat 'em, he'd join them. Investigators found $US4.5 million had been deposited into his Swiss Bank account between 1998 and 2002. (Charges against Pace were suspended as he was diagnosed with serious illnesses associated with alcoholism.)

To use the Italian, Frank Agrama was un raccomandato – an untouchable under the protection of the boss – who took care of the interests of the Berlusconi "family". Any executive who tried to distance him from the acquisition of TV rights from Paramount found themselves frozen out.

According to Pace, he wasn't the only one who tried to extract Agrama from the purchasing of broadcast rights.

Streamline failure

He told prosecutors that Gary Marenzi, who replaced Gordon as president of international sales at Paramount, had been another executive who tried and failed to streamline the buying process. Pace went further, claiming Marenzi "complained a lot about the relationship between Bruce Gordon and Agrama, I think he suspected that there was an economic agreement between the two".

The views of Paramount's top brass about their company's dealings with Agrama are not clear. The prosecutor De Pasquale was never able to back up his suggestion that Gordon's conduct was investigated by the studio. It is understood Paramount executives looked at the contracts signed with Berlusconi companies and found no evidence of wrongdoing by any executives. Paramount is now owned by CBS which declined to comment for this article.

A spokesperson for Gordon said, "Mr Gordon retired from Paramount at age 70 against Paramount's better wishes for him to continue, but did so since 60-65 was the usual retirement age at Paramount and Mr Gordon thought that he had made a sufficient contribution, and wanted to cease constant international business travel, in order to focus on other things (in particular building up his TV broadcasting interests in Australia, which he had started — with Paramount's approval — quite some years previously, and were now a very substantial business of their own).

"There was no 'economic agreement between' Messrs Gordon and Agrama as apparently alleged, so Mr Marenzi had no basis to complain about any such agreement or the relationship between [the] two of them on any other basis, and nor does Mr Gordon believe that there were any such complaints by Mr Marenzi."

De Pasquale did try to recover documents from the US relating to Paramount's dealing with Berlusconi. However, in 2007, the US Attorney's Office in LA blocked attempts to use documents seized during a 2006 search of Agrama's home in Bel Air.

A source familiar with the case said Paramount provided "reams of paperwork but also a huge list of privileged documents you could not see". It is understood De Pasquale never challenged the privilege.

Roberto Pace was not the only Italian to imply Gordon participated in the tax-evasion scheme. His suspicion was echoed by another Mediaset executive responsible for buying content, Giovanni Stabilini, who told investigators it was impossible to bypass Agrama because he was socio occulto di Gordon (Gordon's silent partner).

And there was Alfredo Cuomo, a Roman film distributor (now deceased), who had long bought and sold rights with Paramount. He claimed it was Gordon himself who cemented Frank Agrama's role as middleman for Paramount with the Italians.

Cuomo told investigators during an interview in Monaco in October 2004 that Gordon was "tough and immovable" in negotiations and had steadfastly refused to lower prices or amend contracts.

He recalled that when Agrama's predecessor, Victor Balini, had expressed anxiety about the pricey $US100,000 an episode paid for the 12-part series known as Space and asked for a reduction and contract amendments, Gordon refused.

"Bruce Gordon, being a hard person in negotiations, annulled the contract and thereafter truncated any contact with Balini to deal exclusively with Agrama.

"I have to say that this behavior by Gordon appeared strange to me …" he said, adding that Agrama's role was the talk of the industry.

"The thoughts we had on what happened were the following: we thought there must be an accord between [Mediaset's] Lorenzano, Agrama, Gordon and [another Paramount executive, now deceased, who reported to Gordon, called Peter] Cary in that they divided the secret funds from the purchases of the TV rights, which left us all perplexed."

The final judgment from the Cassazione Court speculates that "it is theoretically possible that Agrama had shared interests with Gordon but what is absolutely certain is that even when Gordon left Paramount, the Paramount/Agrama/Mediaset rapport remained, unaltered".

A spokesperson for Gordon describes the WIN owner's contact with Cuomo as "slight" and says all of the major European broadcasters had local representatives such as Agrama "liaising" with the Hollywood studios. The spokesperson said, "Mr Gordon's contact with Mr Agrama was in this connection, with Mr Gordon representing Paramount as vendors of film and TV programming rights and Mr Agrama (amongst others) Italy's Mediaset, which owned 3 major TV networks and sought to buy such rights for the geographic area of Italy.

Played down

"In their respective capacities as senior representatives of their respective companies, they dealt with each other from time to time, but Mr Gordon does not understand the claim of 'exclusivity', as he dealt with numerous people from each of the major program rights buyers, including (amongst others) Mr Stabilini from Mediaset."

For the investigators, the fact that Mediaset management attempted to bypass the middleman and failed at every turn was important. Berlusconi himself had consistently played down his relationship with Agrama during the course of the trial and in public: "I knew Agrama in the 1980s and then never saw him again," he said in a 2011 TV interview.

It was therefore essential to establish when and how well Agrama and Berlusconi knew each other.

Enter Bruce Gordon once again.

One document recovered by the prosecutors when they visited Paramount's Los Angeles offices in 2006 was a letter sent by Agrama to Gordon. Dated April 12, 1988, the missive begins, "Dear Bruce, as you well know, ReteEuropa/Berlusconi are now about to acquire the controlling interest in Harmony Gold."

The letter goes on to explain that a newly created shelf company, Wiltshire Trading, which was not subject to Italian law, would form part of the new group. Agrama writes this will allow the collaboration with Paramount to continue and concludes by saying he hopes "we can continue the smooth flow of our relations".

Berlusconi never did buy Harmony Gold. But the letter helped the magistrates make the argument that Agrama was indeed "Dr Silvio's socio occulto" or silent partner.

The discovery of the letter came just after the prosecutors uncovered several accounts in a tiny branch of Swiss investment bank UBS which could be traced back to Wiltshire Trading and contained a total of €115 million.

Exactly why Agrama needed to explain the inner workings of the potential deal between Harmony Gold and Berlusconi to Gordon is another mystery.

Gordon could not come up with an answer when questioned about the matter by De Pasquale in Monaco. "I don't know why that letter was sent to me because normally, it would be addressed to our legal department and not to me," he replied.

Why were the Paramount contracts signed with Agrama's companies?

"I don't know. You have to ask Mr Berlusconi because it is he who paid."

As irritating as that first judgment of October 2012 could have been for Gordon had it been widely reported in Australia, it should have been the end of the matter. Gordon's vital role in the trial – and certainly the allegations leveled against him – remained virtually unknown at home.

But Berlusconi is not the sort of man to go down without a fight. Over the years The Knight, as he is known in Italy, has been accused of countless crimes including abuse of office, defamation, extortion, perjury, mafia collusion, embezzlement, witness tampering, corruption and bribery of police officers, judges and politicians. The Mediaset tax fraud trial took place at the same time he was battling charges of paying for sex with a minor during infamous "bunga bunga" parties.

'Damning new evidence'

Yet the Mediaset sentence remains the only time he has been successfully convicted. Even when found guilty in other trials, he had the verdict overturned on appeal or altered to "no conviction" by the Parliament. So when the highest court in Italy's three-tier appeals process upheld the four-year tax fraud sentence in August 2013, Berlusconi took it badly.

Four months later – just days before the Parliament was due to vote on whether to expel the 77-year-old from public life – Berlusconi called a press conference at the Rome headquarters of his centre-right Forza Italia party to announce that a US citizen named Dominique Appleby had come forward with damning new evidence that would exonerate him.

Berlusconi told the packed room that Appleby was a senior executive at Agrama's Harmony Gold between 1989-1996 and had sworn an affidavit in LA days earlier claiming her old boss's role as a middleman had been concealed from the billionaire politician. He then read aloud the entire affidavit.

In the document, Appleby claimed Agrama and Gordon in fact cooked up the tax evasion scheme.

"Over the years, I had dinner more than 30 times with Mr Gordon and Mr Agrama together," she had written. "Usually, I sat next to Mr Gordon and Mr Agrama and on many many occasions, Mr Agrama and Mr Gordon repeated the stories of how they had met, the scheme they had set up and the millions of dollars that both men made from this scheme.

"They used to joke about this during dinner and during other social events. They laughed about how rich they were becoming and how the Paramount people thought Mr Agrama represented Mr Berlusconi while the MediaSet people thought he represented Paramount and how this was a perfect set-up.

"I must have heard at least 10 times, from both men, Mr Agrama and Mr Gordon, and often by both men together, how Mr Agrama had been terribly poor and how Mr Gordon made that historic telephone call to Mr Agrama to invite him to become his new partner in this crime."

During her time at Harmony Gold, Appleby said she never saw a letter from Berlusconi, let alone the man himself. "It was totally clear from them [Agrama and Gordon], their words and actions that neither had a relationship with Mr Berlusconi," she wrote. "I offer this affidavit to the Milanese Courts because I believe there has been a terrible injustice committed."

When he finished reading out the entire affidavit, Berlusconi declared himself the unsuspecting victim of a cunning scheme concocted by the amiable "cat" (Agrama) and the sly "fox" (Gordon), familiar to all Italians in Carlo Collodi's morality tale, Pinocchio.

Preempting the obvious questions in the room – why had Appleby taken so long to come forward – Berlusconi told reporters she had only just learnt of his legal predicament. However, a letter from Swiss authorities to the Milanese prosecutors showed Appleby had been aware of the investigation for years.

The press conference was a masterclass in political melodrama. Berlusconi read out the names "Mr Berlusconi", "Mr Gordon" and "Mr Agrama" so often, endlessly repeating the word "mister", that someone has edited them altogether into a video mash-up on YouTube.

Community service

Having finished with Appleby, Berlusconi solemnly read out a letter of his own to his fellow senators, asking them to rethink their vote in light of the new evidence. If they did decide to throw him out, he added, they should be ashamed "before their children, their family and the whole of Italy".

The Appleby affidavit did not cause the splash Berlusconi's legal team had hoped for. Her claim that neither Gordon nor Agrama had a relationship with the Italian media mogul was debunked almost immediately when Italian newspapers published the photo of Gordon with his arm around Berlusconi at Arcore from the "Bruce Gordon and friends" booklet.

The senate stripped Berlusconi of his parliamentary seat two days later.

There is no doubt the Mediaset case was a humiliating experience for many of the people involved. But the vagaries of the Italian legal system mean precious little time was served by those found guilty.

Berlusconi's four-year sentence was reduced to one year. A law aimed at reducing overcrowding of prisons allows elderly Italians convicted of a crime to serve their time doing community service. This meant the three-time prime minister spent one day a week at a hospice outside Milan helping Alzheimer's patients. Agrama received a three-year sentence, which was also commuted.

For Gordon, a witness who was never charged with anything, it was business as usual. Just two months before Berlusconi's dramatic press conference, he completed the sale of WIN's Adelaide and Perth stations to Nine Entertainment Co boss David Gyngell, the son of his old mate Bruce, for more than $400 million.

At the age of 86 he is currently attempting to block a $590 billion bid for Ten by US media giant Discovery and local pay-TV operator Foxtel, which is 50 per cent owned by Murdoch's News Corporation.

As he does almost every year, Gordon attended Ten's annual meeting in Sydney in December. He declined to speak to reporters, saying: "I've only just arrived from overseas so it would be pretty cheeky of me to come in and start talking."

Gordon won't comment on the specifics of the Berlusconi trial. But on the claims made in the affidavit, a spokesperson says: "Mr Gordon does not recall anyone by the name of Dominique Appleby employed by Mr Agrama, and certainly denies putting together any illegal or legal tax scheme, whether for Mr Berlusconi or with Mr Agrama".

Gordon, who did not bother taking a lawyer with him to the interviews in Monaco, seems to be more bemused than frustrated about the accusations made during the investgation which he regards as completely baseless.

A source close to the billionaire says the allegations against Gordon are sour grapes. "There was a lot of jealousy from people who didn't work at Paramount," the source says. "It's one of those things".

One person happy to share his frustrations with the Italian legal system is Frank Agrama. "Yes of course I remember Bruce, he was one tough son of a bitch," Agrama chuckles down the phone from the offices of Harmony Gold on Sunset Boulevard.

"He used to say ... 'I make $US400 million every year for Paramount' which is true. And I doubt that the guy who came after him made that much. He is a good man. I wish him luck."

If Agrama is bitter he does a good job hiding it. "What you gonna do? Kill yourself?" he asks. "It was very funny. Berlusconi had to serve – what do you call it – community service. Guess where they sent him? A retirement home. Every Saturday he goes in and they say, 'who the f*** are you? Who is this guy?' That's how the Italians work. God bless them."

Of Appleby's claims that Agrama and Gordon concocted the tax evasion scheme behind Berlusconi's back, he says it was the imaginings of a disaffected employee who "was fired" for doing "some silly things".

"I doubt if she met Bruce two or three times. She said we had dinner with him. It's all bullshit. Bruce doesn't have lunch or dinner with anyone. He's a loner. Come on!"

The only problem Agrama has with Gordon was his description of him as an "agent of Berlusconi" during Gordon's first interview with the Monaco police. But Agrama seems happy enough his old acquaintance amended his words when he sat down with De Pasquale for the second interview.

"He corrected it," Agrama recalls accurately. "He said, I am an 'entrepreneur'. Which I am an entrepreneur, up until now. Which I am. I produce films. Or I buy films and I sell them. That's our business."

Agrama says Gordon visited him a couple of times after the case.

"I told him, 'Bruce you said agent'. He said, 'how do I know. They ask me in French with a guy speaking Italian. They corrected it'.

"I said, 'yeah I know you corrected but they are stupid'. Unbelievable. Unbelievable. Never get sued in Italy!"

How it worked - the Shell Game

Stage One

A Hollywood studio such as 21st Century Fox or Paramount sells the right to broadcast a movie or TV program in Italy to an offshore company controlled by Berlusconi's main holding company, Fininvest. For example Mrs Doubtfire is sold to a Fininvest subsidiary based in Lugano, Switzerland, for $US2 million.

Stage Two

Mediaset, the television broadcaster controlled by Fininvest, buys or licenses the same broadcast right for an inflated price. For example, it pays the Lugano subsidiary $US3 million for Mrs Doubtfire.

Stage Three

The profit (eg the $1US million difference in the price of Mrs Doubtfire) is kept offshore, allowing Berluscon's business empire to report lower earnings and pay less tax. Some of the money is siphoned into secret accounts and used to pay kickbacks.

Cast of characters

Bruce Gordon: Billionaire owner of regional broadcaster WIN Corporation and Ten Network's largest shareholder. Worked for Paramount from 1968-1997 including 23 years as president of international TV sales.

Frank Agrama: An Egyptian-born former B-movie director who bought broadcast rights from Paramount and sold to Berlusconi companies. Owns production company Harmony Gold. Lives in LA. Found guilty by Italian court.

Fabio De Pasquale: Italian prosecutor whose marathon tax fraud investigation led to the conviction of Berlusconi and Agrama, among other. Interviewed Gordon in Monaco in 2006.

Daniele Lorenzano: A senior manager at Mediaset who dealt with Gordon. Found guilty by Italian court.

Gabriella Galetto: A long time Fininvest executive in charge of Fininvest's Swiss accounts from Lugano. Found guilty by Italian court.

Roberto Pace: Senior Mediaset manager. Brought in in 1998 to try to balance the books. Attempted to remove Agrama from the buying process.